The gold standard’s wage flexibility presupposed excluding democratic labor from politics
Evidence
You don’t have to be a public choice theorist to see that you can only really run a system like this, where domestic wages and prices do most of the adjusting to external prices, if you are not a democracy. While widgets, potatoes, steel, and pneumatic pumps care not one jot about their supply price, labor most certainly does care, especially when that price (wages) goes down. By making the mechanism of adjustment the random inflation and deflation of prices and wages, a great deal of uncertainty, and unemployment, was created in these economies. It also created conditions where the domestic monetary authorities, to maintain that all important gold cover, would pursue austerity policies such as cutting spending and raising interest rates to shrink deficits, keep gold at home, and defend the currency. It was hardly surprising, then, that it was under the gold standard that labor across the world, both industrial and agricultural, started to join together in unions, political parties, and social movements to demand protection from the vagaries of the market and the policies of their own governments. — Mark Blyth, Austerity, 492
Categorization
- XREF: Directly parallels the ‘asymmetrical adjustment’ critique of today’s Eurozone austerity in Mattei and in Blyth’s own chapter 5 framing. — connects to: The gold standard shielded monetary policy from democratic politics — Clara E. Mattei, The Capital Order: How Economists…, 998; The gold standard naturalized austerity by removing it from political dispute — Clara E. Mattei, The Capital Order: How Economists…, 1302; The gold standard structurally blocked redistributive spending before World War I — Clara E. Mattei, The Capital Order: How Economists…, 102 (+6 more)
- ADDENDUM: Gives the causal backbone for why labor organized under the gold standard — relevant context for how sacrificial systems (here wage austerity) generate counter-movements, which resonates with the sacrifice article.
Broader Connections
- The gold standard shielded monetary policy from democratic politics
#corroborates(0.88) — Clara E. Mattei, The Capital Order, 998 - The gold standard naturalized austerity by removing it from political dispute
#expands(0.85) — Clara E. Mattei, The Capital Order, 1302 - Rising democratic power forced the gold standard into terminal crisis
#qualifies(0.85) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 415 - The gold standard structurally blocked redistributive spending before World War I
#expands(0.82) — Clara E. Mattei, The Capital Order, 102 - The gold standard rigidly subordinated domestic welfare policies to fixed exchange rates
#corroborates(0.80) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 414 - Gold-standard advocates lost the internal monetary debate to floating-rate advocates
#contradicts(0.75) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 411 - Early neoliberals favored the gold standard and opposed floating rates
#corroborates(0.72) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 428 - Mainstream economics denies workers political agency beyond job choice
#corroborates(0.70)